Shares of Starwood Hotels & Resorts Worldwide Inc. (HOT – Analyst Report) jumped 7.8% after the hotelier announced that it has received a non-binding offer from a group of companies to acquire all its outstanding shares for $76 each in cash. The total sum being offered by the group led by Chinese insurance giant, Anbang Insurance Group Co., is around $13 billion, according to media reports.
On Nov 16, 2015, Starwood and Marriott International, Inc. (MAR –Analyst Report) approved a definitive merger to create the world’s largest hotel company. The deal is expected to close in mid-2016, subject to certain regulatory approvals. Per the stock-and-cash transaction, Marriott will pay $12.2 billion.
Starwood shareholders would receive 0.92 shares of Marriott common stock and $2.00 in cash for each share they held as of Sep 30, 2015. Post completion, Starwood would own around 39% of the combined company.
On the other hand, Starwood shareholders will receive a sum from the spin-off of the Starwood timeshare business – known as Vistana Signature Experiences – and its proposed merger, worth roughly $1.5 billion, with Interval Leisure Group’s wholly owned subsidiary.
Following the news, Marriott, in a separate press release, announced its commitment to the $12.2 billion stock-and-cash transaction with Starwood. On completion, the combined entity would operate or franchise more than 5,500 hotels with 1.1 million rooms across the world bringing together 30 brands catering to all lodging segments.
Anbang’s prospective offer shows that the U.S. hotel industry has returned to its former glory post the financial crisis. Further, China’s economic meltdown is resulting in more Chinese companies looking to invest internationally. In fact, recently, Anbang reportedly agreed to buy U.S. luxury hotel chain Strategic Hotels & Resorts Inc. from Blackstone Group LP for approximately $6.5 billion.
Starwood currently carries a Zacks Rank #4 (Sell). Some better-ranked hotel stocks are Marriott Vacations Worldwide Corp. (VAC – Snapshot Report) and Intrawest Resorts Holdings, Inc. (SNOW – Snapshot Report). While Marriott Vacations carries a Zacks Rank #2 (Buy), Intrawest Resorts sports a Zacks Rank #1 (Strong Buy).
